HL Deb 22 October 1987 vol 489 cc294-301

7.7 p.m.

Lord Brabazon of Tara

My Lords, I beg to move that the European Communities (Definition of Treaties) (International Convention on the Harmonised Commodity Description and Coding System) Order 1987 laid before the House on 25th June be approved.

The purpose of this draft order is to declare the International Convention on the Harmonised Commodity Description and Coding System, with its Protocol of Amendment, to be Community treaties under Section 1(2) of the European Communities Act 1972.

The convention is normally known by its short title of the Harmonised System—or HS—Convention. It is the creation of the Customs Co-operation Council (CCC) the international body concerned with Customs matters. It has been designed to modernise and replace, as the basis for Customs tariffs and statistical nomenclatures, the current CCC nomenclature system which dates back to 1950. The aim of the HS Convention is to facilitate international trade, and by means of its unique coding system, the collection, comparison and analysis of international trade statistics.

The convention will come into force on 1st January 1988. Twenty-eight countries as well as the European Community are so far committed to its introduction in 1988. It forms the basis of the EC and UK Customs tariffs for 1988.

Parliament has previously had opportunities to consider the conclusion of the convention by the UK and the EC and has raised no objections. The need now to specify by means of this order as a "Community treaty" under the European Communities Act is a separate consideration.

The House may be aware that the Joint Committee on Statutory Instruments in its Second Report of the 1987–88 Session questioned whether the order under consideration would in fact serve any useful purpose. The Government believe that the draft order is necessary for the avoidance of doubt. We have proposed that the convention should be specified because the new Customs nomenclature which it sets up will replace the current nomenclature in the Common Customs Tariff of the European Economic Community. Even if in practice individuals will normally rely on the Community legislation to be enacted to classify those products within Community competence, certain provisions of the convention itself are also of such a nature that they could be relied upon as a matter of Community law by individuals.

Tariff provisions have been frequently held by the European Court of Justice to be of this character. We therefore believe that the more cautious approach involved in making this order is well justified. It simply has the effect in layman's terms of acknowledging specifically in UK law that the convention may be regarded in Community laws as being directly applicable. I beg to move.

Moved, That the draft order laid before the House on 25th June be approved. [2nd Report of the Joint Committee]—(Lord Brahazon of Tara.)

Lord Bruce of Donington

My Lords, the House will be grateful to the noble Lord for having introduced this statutory instrument. Your Lordships will be interested to know that when this matter was considered in another place on Tuesday 21st July last the Committee started its deliberations at 10.30 a.m. and finished them exactly one minute later, which I would say is an admirable example of brevity that is perhaps not always desirable in considering legislation of this kind. As is customary in your Lordships' House, we tend always to delve a little deeper than sometimes may be convenient when untimely hours present themselves in another place.

The sole purpose of my intervention is to obtain an assurance from the noble Lord. I was able to give private notice to his office earlier today in order to save time. Any system of reclassification of statistical matter—and this expressly deals with figures and with classification—is of very considerable importance to economists, to businessmen and others, and should be so to parliamentarians whose business it is over a period of time to be able to assess trends in the development of our economy and our trade, the nature and extent of the various components of our balance of payments, and so on.

I have not had the time, in the limited period during which the documents have been made available to me, to be able to arrive at any assessment of what effect the adoption of the new commodity description and coding system will have on our statistics, because it is not only the codification and description of the individual items that is involved; it is of course their grouping. Whenever we consider economic and trade affairs in this House we are bound to refer, for example, to those press notices that the DTI issues every month in regard to overseas trade and the balance of payments. Some of us may even refer to economic trends, to the monthly green book, to the income and expenditure accounts of the United Kingdom on an annualised basis, dealing not only with trade classifications but also with production.

I should like to ask the noble Lord whether adoption of the new system of codification and classification will affect the nature and content of the individual groupings of these various items in their summarised form as they appear in the DTI monthly statistics, where one finds, for example, exports of food, beverages, tobacco, basic materials, fuels, total manufactures, semi-manufactures and finalised manufactures. A significant shift as between those classifications of the component items—and there are hundreds of them that appear under the new codified system—in the groupings already incorporated in the summaries of our overseas trade would, unless specifically allowed for by a fairly elaborate footnote, produce a distortion between the new set of figures and those historically applicable.

That is something one is most anxious to avoid, because in order to assess trends, in order to arrive at objective views as to economic and trade developments, it is necessary, as I am sure the noble Lord will agree, to go back and compare. If one is to compare like with like, then one has a fairly accurate trend. But if, as a result of the introduction of this new description and coding system, there is to be in 1988 significant distortions within the groupings to which I have already referred, then it means that the new figures in their summarised form will not carry with them the same degree of confidence as the old, which have been with us for some time.

I must apologise to the House for detaining it so long on this point. However, I am quite sure that those of your Lordships who are concerned with statistical integrity, as I sincerely hope and believe the noble Lord opposite is, will understand the reason I have raised it.

Lord Lloyd of Kilgerran

My Lords, I join the noble Lord, Lord Bruce of Donington, in thanking the Minister for his succinct summary of a somewhat technical and complicated statutory order. I can well understand the anxiety of the Joint Committee of both Houses which was appointed to scrutinise delegated legislation. The committee expressed their anxiety in paragraph 4 of the second report and said that they had difficulty in understanding whether certain matters were clear under Community law. Members of your Lordships' House who have been associated, as I have, for nearly a quarter of a century with Community law realise that it is a very complicated matter and it is very difficult to get the right answer.

One of the questions which worried the Joint Committee—and I am rather surprised that they were worried about this point—was whether it was clear, again as a matter of Community law, that individuals in member states can assert rights under the treaty entered into by the Community with third countries respecting matters affecting common Customs tariffs. However, in the memorandum which was produced by Her Majesty's Customs and Excise and which is an appendix to the second report of the Joint Committee, that was cleared up because of the well-known Kupferberg case of 1982, which indicated in general terms the kind of rights of individuals which could be raised in this area.

Then the Joint Committee went on to say: the Department regard designation as desirable only 'for the avoidance of doubt'". When they were referring to the rights of individuals they did not indicate what were those rights, and if your Lordships will look at the preamble to the international convention you will see that, like many preambles, it is in very general terms, because it states that the contracting parties to the convention desire to facilitate international trade. It then goes on to say—and this is something which we at the patent bar internationally like doing—that they desire to reduce the expense incurred by redescribing, reclassifying and recoding goods, and to facilitate the standardisation of trade documentation and the transmission of data. So the preamble indicates rather wide functions for the purpose of clarifying and facilitating international trade.

I have two points to raise. First, the patent offices of most countries in the world, particularly the Community countries, have methods of classifying goods. They have a form of classification or coding of goods. Perhaps the Minister can tell us, for the avoidance of doubt, how far the international convention will affect the patent offices of the Community, and certainly the United Kingdom Patent Office.

I apologise to the Minister for having only briefly told him about the matter that I am raising. I was asked to look at this 501-page document only this afternoon and therefore it may be that I am not quite as clear and well versed in its intricacies as I should be. However, I have indicated elsewhere (to advisers behind the Minister) that I would be, raising the question. I am sure that the Minister will be well briefed.

The reason that I have raised the question of classification of goods by trade mark offices and how far the convention will affect it is that only a month ago I was presiding in London over a seminar on the European Community trade mark. I do not want to go very deeply into those questions but the matter of how far the Community trade mark arrangements or procedures might be affected by an international convention of that kind was raised. I was not then aware that I would be landed with it today. We all hope that the Government will be giving strong support for the adoption of the European trade mark office in London, rather than on the Continent. It is about time that the United Kingdom had some share in the intellectual property management and procedures of the European Community.

My next question relates to certain legal aspects referred to so generally in the international convention volume which I have before me. It says on page 22, under the heading, "General Rules for the Interpretation of the Harmonized System": The titles of Sections, Chapters and Sub-Chapters arc provided for ease of reference only; for legal purposes, classification shall he determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require according to the following provisions". We then have a most complicated page and a half which I am not proposing to read.

One of the extremely important legal functions of the Customs officers of this country—and perhaps in different ways in other countries of the Community—is that someone can notify Customs officers that certain goods which are being imported into the country infringe a particular trade mark. That trade mark will have been registered in the United Kingdom under the classification of goods. Therefore I return to my first question concerning whether or not and how far this new international convention will affect the classification of goods by particular patent offices and particularly the United Kingdom Patent Office.

A Customs officer can, of his own discretion, stop goods coming into the country because he says that prima facie the goods are infringements of trade marks and cannot come into the country. In cases that I have been personally concerned with that decision has stopped a business, or a substantial part of it, forthwith and almost overnight. Therefore, for the avoidance of doubt I hope that the Minister will be able to say that the terms of the international convention will in no way affect the functions and powers for legal purposes to facilitate international trade, reduce expenses of any legal proceedings and not affect in any way that standard procedure which is prevalent today. If I were asked to give a personal opinion, as I have not been, I should say that it would not be affected. However, the general terms and wordings of parts of the convention lead me to ask for the avoidance of doubt.

The last thing I wish to raise is a de minimus point and it may be that I have missed the answer. The Printed Paper Office (to whom I am very grateful for their research) gave me a copy of the instrument referred to in the second report. It is the Protocol of Amendment to the International Convention on the Harmonised Commodity Description and Coding System attached as in paragraph 2 of the schedule to the statutory order. The copy I have describes the protocol, mentions Brussels and 24th June 1986, and then says: The protocol has not been accepted by the United Kingdom". The noble Lord, Lord Bruce of Donington, is smiling kindly at me and I am sure that he has the answer to my question.

In conclusion, perhaps I may also adopt the very concise and helpful observations and questions raised by the noble Lord, Lord Bruce of Donington.

Lord Silkin of Dulwich

My Lords, I should like to say a few words following but not on the same lines as those placed before the House by the noble Lord, Lord Lloyd, on a question of law to which the Minister also referred. However, I do not think he gave the full explanation which certainly is required.

The short point is that the code cannot take effect unless it is enacted by an EC regulation, as was intended. That prospective regulation has already been published in the Official Journal, L256, of 7th September of this year. My understanding is that once the regulation comes into effect it is totally unnecessary for us to bring the code into further effect through the operation of the European Communities Act. I understand that that is the point which was being made by the Joint Committee in its second report, which it summarised by saying: In these circumstances it does not seem to the Committee that to designate a Convention as a Community Treaty would serve any useful purpose". I would go further than that and suggest that if we add to that by enacting what is contained in this Motion we shall cause confusion as to whether such a Motion is necessary and whether action is necessary by ourselves under the Treaty. That is notwithstanding the fact that the provision has become United Kingdom law by virtue of the regulation.

Those who are interested in these matters will inevitably say to themselves why have they taken this action and why have they not relied on the regulation. They are likely to go further and say there must have been some reason for it because the normal form and the normal understanding is that you do not enact the same thing twice over. There must have been some reason for it and we have to find out what that reason is. it seems that confusion will necessarily follow.

It is interesting to see how this matter has developed. My noble friend Lord Bruce of Donington drew our attention to the fact that the Motion went through the other place on the nod in less than a minute. I think it was at a late hour of the night. That took place before the Select Committee had issued its second report. The result was that the other House did not have the benefit before making its decision on the nod, of reading the report of the Joint Committee on Statutory Instruments. That is a powerful body with important legal membership. Therefore the other House was unaware of the fact that that body having gone into the matter in detail, was intending to report that the Motion serves no useful purpose.

Then it comes to this House, and we now have the opportunity of giving some effect to the provisions of the second report. This is the first time that the opportunity has arisen. It is perhaps unfortunate—and there is nobody to blame, I am sure—that the other House did not have that opportunity. Now that we have it would it be right in those circumstances to let it go through without a proper consideration of the view of the Select Committee?

That submission of mine has greater force by virtue of the various important points which were made by the noble Lord, Lord Lloyd, a moment ago which clearly require some answer. This cannot be a matter of urgency because the regulations become effective on 1st January next year. Would it not be sensible for the Government now to withdraw the Motion and perhaps refer it to the EC Committee of this House? They would no doubt wish to ask their legal subcommittee to consider the matter both in relation to the points raised by the noble Lord, Lord Lloyd, and this important procedural point which affects not only this matter but which may be a precedent for similar situations in the future. I hope the Minister feels in the circumstances that that is the right thing to do rather than seeking to force this Motion through tonight.

Lord Brabazon of Tara

My Lords, I am grateful to the noble Lords who have spoken on this Motion and I shall attempt to deal with the points which have been raised. I am most grateful to the noble Lord, Lord Bruce of Donington, for having given me advance notice of the question that he was going to raise. I shall attempt to deal with it in some detail.

The overseas trade statistics are generally compiled on the basis of the standard international trade classification system developed by the United Nations. There will be a change from SITC Revision 2 to SITC Revision 3 from 1988. SITC Revision 3 is based so far as possible on a one-to-one correlation with the harmonised system.

The extent to which the 1988 statistics will be directly comparable with those for 1987 and earlier years depends on the level of detailed breakdown used. It is not possible to be specific but at the higher divisional levels the movement of goods between classifications is not great so the statistics will remain largely comparable. At a more detailed level there is greater change and comparisons between 1987 and 1988 statistics will have to be treated with caution.

HM Customs and Excise and the DTI are about to issue an information note in a forthcoming issue of British Business which will give more detailed advice on the implications for users of the overseas trade statistics. In addition the guide to the classification for overseas trade statistics to be published for 1988 by HM Customs and Excise will contain an extra volume providing correlations including SITC 2 to SITC 3 and vice-versa. By use of these tables it will be possible for users to make the link between the 1988 statistics and earlier years.

I hope that that will satisfy the noble Lord, Lord Bruce of Donington. The noble Lord, Lord Lloyd of Kilgerran, asked me a question about trade marks and I am grateful to him, too, for giving me advance notice of this question. I am assured that there are no implications for the methods of control used by Customs authorities in relation to trade marks. The introduction of the harmonised system has no bearing at all on trade mark legislation which is what the noble Lord in any case suspected. I think I can assure him on that point. As to the protocol of amendment which was mentioned, that was accepted by the United Kingdom at the time of the ratification of the convention on 22nd September. That has now gone through.

I now turn to the point made by the noble and learned Lord, Lord Silkin. He suggested that the order should be withdrawn at this point. As I explained the Government believe it is advisable to make this order for the avoidance of any doubt in the matter. The order has already been accepted by the other House. Having said that I have no doubt that all those concerned with any future similar cases will pay due regard to the views which have been expressed on this occasion by the Joint Committee on Statutory Instruments and indeed by the noble Lord in the House this evening. I hope that your Lordships feel that they can accept the order this evening.

Lord Lloyd of Kilgerran

My Lords, before the noble Lord sits down, so far as I understood him he has not quite dealt with my question about what will be the effect of the International Convention on the Patent Office classification of goods. Would not the Patent Office have to alter their classification of goods to conform with this convention?

Lord Brabazon of Tara

My Lords, as I understand the position it will not affect patent law or classifications. I shall certainly look into that matter further and write to the noble Lord.

On Question. Motion agreed to.

Lord Beaverbrook

My Lords, I beg to move that the House be now adjourned during pleasure until 7.50 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.40 to 7.50 p.m.]